GNI touch® is a trading name of MF Global UK Limited and is authorised and regulated by the Financial Services Authority.
MF Global Holdings Ltd. is the leading broker of exchange-listed futures and options in the world. It provides execution and clearing services for exchange-traded and over-the-counter derivative products as well as for non-derivative foreign exchange products and securities in the cash market. Its worldwide client base of more than 130,000 active accounts ranges from financial institutions, industrial groups, hedge funds and other asset managers to professional traders and private/retail clients.
MF Global operates in 12 countries on more than 70 exchanges, providing access to the largest and fastest growing financial markets in the world. Because its business is uniquely diversified across products, trading markets, customers and regions, MF Global is able to adapt quickly to changing market conditions and client needs and maintain its market-leading position.
Foreign Exchange trading (also known as Forex trading or FX Trading) is one of the worlds most recognised and liquid trading asset classes. From exchanging your own cash to managing an institutional balance sheet, most people recognise the basics of Forex trading. Participants in today's Forex trading market include large banks, central banks, currency speculators, corporations, governments and other institutions.
Within Foreign Exchange itself, there are many financial instruments that you can trade as a market participant: Spot, Forward, Future, Swap and Option.
Different types of Foreign Exchange transactions:
A spot transaction is a two-day delivery transaction. As opposed to the futures contracts which are usually three months, this trade represents a “direct exchange” between two currencies, and has the shortest time frame and involves cash rather than a contract.
A forward transaction is another way to deal with the foreign exchange risk. In this transaction, money does not actually change hands until some agreed upon future date. A buyer and seller agree on a Foreign Exchange rate for any date in the future, and the transaction occurs on that date, regardless of what the market rates are then.
A currency swap is the most common Foreign Exchange trade. In a swap, two parties exchange currencies for a certain length of time and agree to reverse the transaction at a later date.
Foreign Currency Futures are exchange traded forward transactions with standard contract sizes and maturity date. Futures are standardized and are usually traded on an exchange created for this purpose. The average contract length is roughly 3 months.
A foreign exchange option (commonly shortened to just FX option) is a derivative where the owner has the right but not the obligation to exchange money denominated in one currency into another currency at a pre-agreed exchange rate on a specified date.
Understanding Foreign Exchange Quotes
When trading Foreign Exchange, a Forex quote or currency pair always has two sides, a 'bid' and 'offer'. The 'bid' is the first price quoted at which you can sell the base currency (i.e. buy the second currency). The 'offer' is the second price quoted at which you can buy the base currency (i.e. sell the second currency).
The first currency listed is the base currency. For example the US Dollar is traditionally treated as the base currency such as USD/JPY, USD/CHF and USD/CAD. In this case $1 USD (the base currency) is quoted in terms of the second currency. For example, a quote of USD/JPY @ 96.17 means that one U.S. dollar is equal to 96.17 Japanese Yen.
Amongst the major currency pairs there are three exceptions where the US Dollar is not quoted as the base currency, the Euro (EUR), the British Pound (GBP), and the Australian dollar (AUD). In these cases, you might see a quote such as EUR/USD @ 1.3610, which means that one Euro equals 1.3610 U.S. Dollars.
In both of the above forex examples the base currency becomes stronger when its price increases. For example if the EUR/USD rises from 1.3610 to 1.3700 the Euro is stronger because it is now worth more Dollars.
Cross currencies are currency pairs that do not involve the U.S. Dollar, for example, EUR/GBP, GBP/AUD, EUR/JPY etc. A quote of EUR/GBP at 0.6750 signifies that one Euro is equal to 0.6750 British Pounds.
What's the goal in FX Trading?
The investor's goal in Forex trading is to profit from foreign currency movements. Forex trading or currency trading is always executed in currency pairs, for example EUR/USD, GBP/USD and EUR/GBP. When trading Forex, you will establish an unrealised profit if the currency you are buying increases in value relative to the currency you are selling.
In order to lock in the profit you must close the position at the improved rate/price. Please note that if the currency moves against you, your unrealised profits would have been losses.
Margin based FX trading:
When trading Foreign Exchange, in order to maximise your views and opinions on the markets, many Foreign Exchange brokers offer margined based trading, which means that a trader can utilize more capital than they have in their account. The volatility of currency pairs is usually less than other markets, such as futures and equities. Since there is less movement, traders leverage their capital to make money on smaller moves. The amount of margin available when Forex trading is as high as 2.5% (40:1 leverage), with £5,000 of capital, you can trade up to £200,000 at 40:1.
If you were to trade £100,000 GBP/USD you would be required to have at least £2,500 at 2.5% margin in your account to open the trade. Forex trading on margin is a double edged sword. You can lose money equally as fast as you make it. It is therefore vital to have a full understanding of the Foreign Exchange market and not commit too much of your equity to each trade.
FX Trading Example
The EUR/USD is trading at 1.3610 / 1.3612 and a trader believes the EUR/USD could rise.
A trader buys 1 million EUR at 1.3612. This means he has, in effect, paid USD$1,361,200 for 1,000,000 EUR. To enter into such a transaction a margin of 2.5% or €25,000 would be required.
Every time the market moves by .0001 up or down, the trader makes or loses USD$100. For example if the trader is correct and the EUR/USD moves to 1.3712 / 1.3714 then he could sell EUR (buy USD) at 1.3712 or USD$1,371,200. This would generate a profit of USD$10,000. If the position were to move against you, then you would incur a loss which could be in excess of the funds deposit.
Summary
Buy 1m EUR @ 1.3612 USD$1,361,200
Sell 1m EUR @ 1.3712 USD$1,371,200
PROFIT USD$10,000
N.B. Please note that you may not always make a profit and if the market moves against you, you may be subject to losses far in excess of your initial investment.
Online Forex Trading
Technology has revolutionised all types of financial trading and particularly online forex trading. Originally traded either by phone (Spot FX) or on an open-outcry regulated exchange (Futures and Options), financial markets such as Derivatives and FX have been at the forefront of the world's economy. FX trading is the most liquid and recognised financial market in the world and online Forex trading is now the most popular form of trading worldwide. Many banks and brokerage houses provide trading platforms offering online Forex trading. Variables such as margin rates, currency pairs and spreads all contribute to make the online forex trading market one of the most competitive financial markets in the world.
GNI touch® Forex
The GNI touch® online Forex Trading Platform is a 'spot' based online forex trading tool. It provides access to 40+ currency pairs and offers 40:1 (2.5%) margin. There are live charts and news feeds alongside the 24-hour streaming FX trading prices. Quotes are provided by multiple major worldwide liquidity providers from which the GNI touch® Forex Virtual-Exchange sources the best bid and offer for each pair, so that the end client always obtains the optimum FX trading spread.
The GNI touch® Forex trading platform makes online forex trading more easily accessible to clients who have traded in other markets previously because of the FX trading support offered. The forex trading platform does all of the bid sourcing for clients and keeps them up to date with any breaking FX trading news.
Clients using the GNI touch® online Forex trading platform can benefit from 24-hour trading helpdesk for any online FX Trading support issues as well as a traditional telephone broking desk. The minimum online forex trading account deposit is £2,000 for mini trading accounts and £5,000 for full sized FX trading accounts.
